Kempen Lux Euro Sustainable Credit Fund - Class BN

Profile

Kempen International Funds SICAV - Kempen (Lux) Euro Sustainable Credit Fund (the Fund) invests primarily in credits that have an investment grade rating (of minimal BBB-) and are denominated in Euros. In addition, these companies must comply with strict sustainability criteria. The Fund may invest a small part in credits that are not included in the benchmark.

The benchmark, the Markit iBoxx Euro Corporates Index, only includes bonds with an investment grade rating. The Fund aims to earn a higher total long term return than the benchmark by implementing an active investment policy. In order to achieve this, a diversified portfolio is constructed and investment risks are continuously monitored. Investments are selected on the basis of extensive analysis of the terms and conditions of the bond issues.

In the interest of the shareholders it has been decided to soft close the Fund as per 5 January 2016. The Fund will continue to accept daily inflow below EUR 5 million from only existing investors. For investments greater than EUR 5 million please contact the Fundâ€™s relationship manager. Redemptions will still be possible. More information about the soft close can be found in the Notice to shareholders in the tab Documents.

Performance per 2018-01-31 (rebased)

Performance per 2018-01-31

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Fund

Benchmark

1 month

-0.4%

-0.3%

3 months

-0.7%

-0.7%

This year

-0.4%

-0.3%

2015

-0.2%

-0.7%

2016

4.7%

4.7%

2017

2.2%

2.4%

3 years (on annual basis)i

1.8%

1.7%

Since inception (on annual basis)i

2.3%

2.2%

Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Key figures

Fund characteristics per 2018-01-31

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Fund

Benchmark

Number of holdings

241

2179

Durationi

5.5

5.2

Yield to maturity

1.0%

1.1%

Weighted rating

A

BBB+

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Market developments per 2018-01-31

In January, the spread of the iBoxx Euro Corporate Index tightened by 13 basis points to 83 basis points above the government bonds curve. The index earned an absolute return of -0.27%. German 10-year bond yields ended January at 0.69%, an increase of 27 basis points compared to the end of December 2017.

The sharp rise in yields, both in the US and Europe, seems to be being driven by growing concerns about the prospect of upward inflationary pressure caused by persisting economic growth in almost all the worldâ€™s major regions. This economic growth is resulting in higher capacity utilisation rates and tighter job markets, which in the long term could lead to higher prices and wages. In a bid to stop the economy from overheating, the Fed is preparing to implement three to four interest rate hikes this year. At the same time, since the beginning of this year the ECB has started to scale back its bond-buying programme from EUR60 billion a month to EUR30 billion. The less expansionary monetary policies being pursued by both central banks have contributed to negative sentiment on the bond markets, particularly for government bonds. However, the impact on the European corporate bond market is being tempered somewhat by the fact that the ECB hardly reduced its purchases of European corporate bonds in January compared to November 2017. Moreover, the corporate results over 2017 published so far are fairly solid.

General Electric, one of the largest issuers of corporate bonds, surprised investors with two disappointing announcements. Firstly, the company announced that it needed to take a further USD15 billion in additional reserves in GE Capital and that, partly as a result of this, the subsidiary would cease paying dividends for the time being. In addition, US watchdog SEC has started two investigations into the companyâ€™s accounting methods. Bonds issued by General Electric performed worse than average in the wake of these news items. In the longer term, General Electricâ€™s current A2/Stable and A/Stable ratings from Moodyâ€™s and S&P could come under pressure if the company implements a far-reaching reorganisation involving the sale of several of its operations.

The number of announced mergers and acquisitions remains very elevated and looks set to increase in the short term now that there is greater clarity on the US tax regime. In January, French pharmaceutical company Sanofi announced two acquisitions, namely a EUR9.1 billion bid for Bioverativ and a EUR3.3 billion bid for Ablynx. Beverages producer Bacardi revealed plans to take over tequila manufacturer Patron Spirits International for EUR4.2 billion. Bacardiâ€™s acquisition could result in its Baa1 rating from Moodyâ€™s being downgraded by as many as three notches. Finally, coffee producer Keurig Green Mountain (a subsidiary of JAB Holdings) has announced a merger with US soft drinks manufacturer Dr. Pepper Snapple for EUR18.7 billion.

The supply of new bonds was EUR49 billion in January, and therefore about 8% down on January 2017. Non-financial sector institutions issued EUR24 billion in new bonds last month, while financial sector institutions issued EUR25 billion in new bonds.

Portfolio developments per 2018-01-31

The Fund aims to avoid investments that act in breach with the VFI Richtlijn Financieel Beheer Goede Doelen (VFI Directive Financial Management Charities). De VFI Directive consists of basic guidelines and additional guidelines. The basic guideline advises institutions to investigate investments on violations of among others human rights, corruption and protection of the environment. The additional guideline is developed for organisations that want to apply stricter sustainability criteria in the investment policy. This directive includes further exclusions of companies involved in for example nuclear power, alcohol, tobacco, laboratory animals, adult entertainment and genetic modification. Each quarter, the investment universe is screened for violation of the VFI Directive. This screening is conducted based on the MSCI ESG Research database.

During the month, the portfolioâ€™s sensitivity to market trends varied between 85% and 90%. The portfolio therefore held an underweight positioning in terms of market risk.

Our positioning in the telecom, industrial goods and oil & gas sectors performed relatively well in January. In contrast, our positioning in the auto, banking, and utilities sectors contributed negatively to the return. Our liquidity position (in the shape of cash and government bonds) also contributed negatively.

At individual company level, there were positive contributions from the overweights in CaixaBank, OMV, Telecom Italia, Allianz and DS Smith. In contrast, the underweights in Volkswagen (excluded) and EDF (excluded) and the overweights in short-term bonds issued by companies such as Eurogrid, Fraport and Morgan Stanley contributed negatively.

Outlook The lack of dispersion in the interest premiums that companies with wide-ranging levels of creditworthiness are having to pay remains a serious cause for concern. Although the corporate bond market in Europe will continue to be supported by the ECBâ€™s CSPP programme for the time being, we will maintain our conservative positioning in the portfolio. Spreads tightened so sharply in January that they now stand at extremely tight levels from a historical perspective. Idiosyncratic risks are also growing at companies, given the high number of debt financed mergers and acquisitions and management teams that are increasingly considering breaking up their companies into smaller, less well-diversified entities.

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Performance per 2018-01-31 (rebased)

Performance per 2018-01-31

Slide to see more

Fund

Benchmark

1 month

-0.4%

-0.3%

3 months

-0.7%

-0.7%

This year

-0.4%

-0.3%

2015

-0.2%

-0.7%

2016

4.7%

4.7%

2017

2.2%

2.4%

3 years (on annual basis)i

1.8%

1.7%

Since inception (on annual basis)i

2.3%

2.2%

Performance is shown after deduction of ongoing charges and including the reinvestment of dividend that has been paid out. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Rating allocation (2018-01-31)

The rating allocation of the Fund is based on the Bloomberg Composite method. The rating allocation of the benchmark is based on the rating allocation used by provider Markit iBoxx.

Top 10 holdings (2018-01-31)

1.7%

2.875% Statoil 2013-25

1.6%

1.375% DS Smith 2017-24

1.5%

1.500% Enexis 2015-23

1.4%

3.875% Eurogrid 2010-20

1.1%

1.000% OMV 2017-26

1.1%

1.375% Terna 2017-27

1.1%

1.375% Goldman Sachs 2017-24

1.1%

1.375% FCA Bank Ireland 2015-20

0.9%

1.000% Kellogg 2016-24

0.9%

5.250% Fraport 2009-19

Totaal

12.3%

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Ongoing charges

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Management feei

0.32%

Service feei

0.15%

Taxe d'abonnementi

0.05%

Expected ongoing chargesi

0,52 %

Other costs

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Upward swing factor i

0.20%

Downward swing factori

0.20%

The swingfactor is applicable if the sum of in and outflow (end trading day) is more than a pre defined percentage ( the so called â€˜thresholdâ€™) of the fund size. The level of the threshold 1%; investors can request KCM for information about the thresholds that were applied in the past.
As of 1 January 2018 the swing factor has been adjusted from 0.25%/0.25% to 0.20%/0.20%.

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Tradability

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Minimum subscription

Initial subscription: â‚¬50,000, additional subscriptions: â‚¬10,000

Listed

no

Subscription/Redemption Frequency

Daily

ISINi

LU0979490850

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.

KCM Vision

Kempen Capital Management is an asset manager with a long-term investment approach.
We strongly believe in engaged shareholdership that benefits all stakeholders. As
a long-term responsible investor, we firmly believe that active ownership and
shareholder engagement contribute to positive change across the board.

Our KCM wide approach to responsible investment

To put our vision into action we engage with our investment targets on a wide
array of strategic, financial, environmental, social and governance (ESG) topics.
Our long-term investment worldview paired with thorough analysis and an
experienced and diverse ESG team allow us to use both voting and engagement as
means to consistently encourage positive change. Through this process of
constructive engagement, we are able to contribute to the development of
principles and standards of corporate responsibility within companies that we invest in.

Our fund approach to Responsible Investment

The Kempen (Lux) Euro Sustainable Credit Fund has a more strict ESG process than other in-house credit funds. In addition to exclusion of companies that are on the general KCM exclusion list, it excludes companies that have violate the UN Global compact or the additional ethical guidelines, such as companies associated with nuclear energy, coal, alcohol, tobacco, adult entertainment and gambling. Furthermore, besides excluding companies associated with the production of controversial weapons, our definition includes any sort of military weapons.

An engagement approach is chosen for companies that are involved in GMO, factory farming, animal testing or if less than 5% of their revenue is derived from the production of fur or fur products.

Kempen (Lux) Euro Sustainable Credit Fund (the â€œSub-Fundâ€) is a sub-fund of Kempen International Funds SICAV (the â€œFundâ€), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by The Netherlands Authority for the Financial Markets. The Sub-Fund is registered with The Netherlands Authority for the Financial Markets under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document and the prospectus. These documents of the Fund are available at the registered office of the Fund located at 6H, route de TrÃ¨ves, L-2633 Senningerberg, Luxembourg and on the website of KCM (www.kempen.com/investmentfunds).

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future.